This National Institute of Education (NIE) study of compensatory education, and evaluation of Elementary and Secondary Education Act Title I is a response to congressional evaluation needs. The report traces the origin of Title I and the congressional interest in its evaluation. Prior efforts to assess the effectiveness of Title I, congressional reactions to these efforts, and the attempts of NIE to formulate an evaluation strategy by examining the fundamental purposes and effectiveness of compensatory education programs are discussed. Ways of identifying children in greatest need of compensatory education, determining alternate ways of meeting these children's needs, and considering the feasibility, costs, and consequences of alternative means of distributing federal compensatory education funds are also mentioned. (Author/BS)